The German postal and logistics firm Deutscher Versand Service (DVS) has filed for insolvency in self-administration, citing competitive pressures, rising costs, and what it describes as a tax disadvantage enjoyed by its larger rival, Deutsche Post. The move, announced on , also comes as DVS prepares to launch a substantial legal challenge against Deutsche Post, alleging anti-competitive practices.
DVS and its subsidiary, Xendis GmbH, initiated the insolvency proceedings, seeking to restructure their operations and address the financial strain. According to DVS Managing Director Michael Mews, the self-administration process is a deliberate step to stabilize the companies in a “structured and legally defined manner.” He affirmed that business operations would continue uninterrupted during the proceedings.
DVS primarily serves large-volume business customers – including banks, insurance companies, and energy providers – who benefit from discounted postage rates through pre-sorting of mail, and packages. The company’s financial difficulties are rooted, in part, in the competitive landscape dominated by Deutsche Post, which benefits from an exemption from value-added tax (VAT) on its universal postal services, particularly standard letter delivery. Private competitors, like DVS, are generally required to charge VAT, creating a cost disparity.
However, the tax advantage is not the sole source of DVS’s grievances. The company alleges that Deutsche Post has engaged in practices designed to stifle competition in the business mail sector. Specifically, DVS claims that Deutsche Post undercut minimum prices for “Dialogpost” – promotional letters sent to households – securing contracts that would otherwise have gone to DVS. Deutsche Post denies these allegations.
The core of the dispute centers around the classification of mail. DVS contends that Deutsche Post improperly categorized business mail as Dialogpost, allowing it to offer artificially low prices. This practice, DVS argues, has cost it significant business. The company is now preparing to file a lawsuit seeking approximately €1 billion in damages from Deutsche Post.
This legal battle is not new. A case has been ongoing at the Düsseldorf Regional Court since , with DVS accusing Deutsche Post of years of price dumping. Deutsche Post, however, maintains a “fundamentally different legal view” and intends to vigorously defend itself in court. Tobias Meyer, CEO of Deutsche Post, has previously dismissed the claims as “unfounded and far from reality.”
The dispute has also attracted the attention of investors. 7Square Partners, a co-partner of DVS and a shareholder in Deutsche Post, has publicly criticized Deutsche Post’s alleged abuse of market power. In a letter to the Management and Supervisory Boards of Deutsche Post, 7Square Partners accused the company of systematically preventing competition and questioned the oversight of the Supervisory Board. The investor’s concerns echo those of DVS, highlighting the potential for broader implications for the German postal market.
Deutsche Post, however, has pushed back against the criticism. The company has emphasized its commitment to protecting its assets and interests, both publicly and in court. In , Meyer criticized the €978 million damage claim sought by DVS as “exaggerated.”
The situation also reflects a broader history of scrutiny surrounding Deutsche Post’s competitive practices. In , Germany’s Federal Cartel Office initiated proceedings against DHL (Deutsche Post’s logistics arm) related to concerns about the consolidation of letters through its subsidiary, Deutsche Post InHaus. However, the proceedings were ultimately dropped after DHL sold its stake in Compador, a company at the center of the investigation. Critics have suggested that this outcome raised questions about the effectiveness of regulatory oversight.
The insolvency of DVS underscores the challenges faced by smaller players in competing with a dominant, state-supported entity like Deutsche Post. The outcome of the impending legal battle will likely have significant ramifications for the future of competition in the German postal market, potentially setting a precedent for how similar disputes are handled in the future. The self-administration process will be closely watched by creditors and industry observers as DVS attempts to navigate its financial restructuring and address the underlying competitive pressures.
